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TMI Blog2010 (8) TMI 173X X X X Extracts X X X X X X X X Extracts X X X X ..... . All these aspects are therefore left to the consideration of SPBI at the time of passing final order in the inquiry.Since we have only interpreted the provisions of the SEBI Act and the CA Act, in our view, no substantial question of law of general importance is involved and hence the prayer for leave to appeal to Supreme Court is rejected. - WRIT PETITION NOS. 5249 AND 5256 OF 2010 - - - Dated:- 13-8-2010 - P.B. MAJMUDAR AND R.M. SAVANT, JJ. Janak Dwarkadas, Shyam Mehta, Somasekhar Sundaresan, Zerick Dastur, Ms. Khursheed Vazifdar, N.H. Seervai and Ms. Prerna Arora for the Petitioner. Ravi Kadam, Shiraz Rustomjee, Jayesh Ashar, Mihir Mody and Rajesh Talekar for the Respondent. JUDGMENT P.B. Majumdar, J. - The question raised in these petitions is as to whether the Securities and Exchange Board of India ( the SEBI ) has power to issue show-cause notices to the Chartered Accountants in connection with the work which they have undertaken for a listed Company in the matter of maintaining accounts and balance-sheets? 2. These petitions have been filed challenging the action of the SEBI to issue show-cause notices to the firm of Chartered Accountants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I ordered an investigation into the affairs of the Company to ascertain particularly whether the provisions of the SEBI Act and Rules and Regulations made thereunder have been violated. To facilitate such investigation, SEBI also ordered inspection of the books and accounts of the Company. 3. As per the show-cause notice, the findings of the investigation and inspection conducted so far which are found relevant in connection with the relations of the concerned petitioners as Auditors of the Company and abstract of the cash and balance of the Company is also incorporated in the said show-cause notice. Various accounting figures have been given in the said show-cause notice. The summary of findings has been given in the said show-cause notice and in paragraph 3.4.1, following prima facie conclusions are reached by SEBI : "( a )It is unambiguous from the above analysis that the current account balance of BoB New York branch has been overstated by Rs. 1,731.88 crore as on September 30, 2008. ( b )Fixed Deposits accounts have been overstated by Rs. 3,308.41 crore as on September 30, 2008. ( c )These overstatements can be traced back to the years 2001 to 2008, cash and bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the listing agreement permanently or for a specific period and that the petitioners should be restrained from assessing the securities market and prohibited from buying, selling or dealing in the securities of the Company and its associate listed Companies in any manner whatsoever, permanently or for a specific period. It has also been mentioned in the said show-cause notices that this is without prejudice to SEBI s right to initiate prosecution under section 24 of the SEBI Act and other action as it may deem fit in terms of the provisions of the Act and Rules and Regulations framed thereunder. The petitioners were asked to show-cause within 21 days as to why such action should not be taken. 5. A supplemental show-cause notice was also issued in pursuance of the further material which became available to the SEBI during the course of investigations. Particulars in this connection have also been given in the said show-cause notice. 6. The petitioners gave replies to the said show-cause notices and inter alia raised the point of jurisdiction of SEBI to proceed against the petitioners who are members of the Institute as, according to the petitioners, SEBI lacks inherent j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inherent lack of jurisdiction on the part of the SEBI to initiate any proceedings or call for any information from the petitioners who are discharging their duty as professionals and if there is any omission or neglect on the part of any of the petitioners or for that purpose by any Chartered Accountants in the matter of discharging their professional duties, it is only the Institute who has the power to regulate this profession of the Chartered Accountants under the Chartered Accountants Act, 1949 (hereinafter referred to as the "CA Act") and SEBI has no jurisdiction to issue the show-cause notices and inquire into or adjudicate the alleged violations against the petitioners. Though during the course of this petition, it is argued by Mr. Dwarkadas and Mr. Seervai that the SEBI should have decided the question of jurisdiction first and should have at least passed an order on the applications of the petitioners one way or the other. The concerned Member of SEBI has failed to discharge his duties as a quasi-judicial authority by not passing any order on such applications of the petitioners regarding the preliminary issue of jurisdiction. It is submitted that it in any case at least s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause notices in connection with the alleged act or omissions attributed to the petitioners while discharging their professional duty with a Company. It is further submitted on behalf of the petitioners that in any case, whether the petitioners have violated the audit norms prescribed by the Institute is not a matter which falls within the purview of the SEBI. Even otherwise, it cannot be said that the members of the SEBI can have any technical knowledge in this behalf and this aspect is therefore required to be left only with the body of professionals, i.e., the Institute. It is also submitted on behalf of the petitioners that in any case by holding an inquiry under the SEBI Act, the SEBI cannot rely on the norms prescribed by the Institute and by lifting those norms from the said Act, SEBI cannot proceed against the Chartered Accountants on the ground that such audit norms have been violated by a particular Chartered Accountant. It is submitted that whether any audit norms have been violated by the petitioners is a question which can be decided only by the Institute and not by the SEBI. It is submitted that the SEBI, therefore, lacks jurisdiction to proceed further with the mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the securities market. It is submitted by Mr. Dwarkadas that in a given case if it is found that the Chartered Accountants were negligent or have committed any particular misdeed, the remedy available is to file an appropriate complaint to the Institute and the Institute is the competent authority who can take care of such a situation. On the basis of aforesaid submissions, it is submitted that the show-cause notices issued to the petitioners are required to be quashed and set aside as SEBI lacks inherent jurisdiction to proceed further with the inquiry. 13. Mr. Ravi Kadam, the learned Advocate General appearing for the respondents, in his turn submitted that the matter relates to a big scam relating to the shares of the Company which ultimately had a cascading effect on the securities market. It is submitted by him that it is not possible to believe that such a scam must have gone unnoticed and without the knowledge of the Auditors of the Company. It is submitted by him that the SEBI ultimately decided to take proceedings against the present petitioners with a view to see that such type of incidents may not happen in future in connection with the public listed companies. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... afeguard the interest of investors which is within the domain of SEBI and the Institute cannot have any jurisdiction in connection with the same. Mr. Ravi Kadam has relied upon the provisions of section 227 of the Companies Act regarding powers and duties of Auditors and submits that a Chartered Accountant is having an important duty and is required to take great care in the matter of certifying the books of account and balance-sheet of the Company as people who are dealing in securities market are likely to be guided by the financial health of the Company after going through the balance-sheet of the Company. It is submitted that the financial statements are also placed on the website as well as in the newspapers and the investors are therefore guided by the same. It is submitted that a shareholder is also an investor. In a given case if the Chartered Accountant has violated the norms and standard of accounting prescribed by the CA Act, the SEBI has jurisdiction to take regulatory measures for protecting the investors interest by taking appropriate steps against the Chartered Accountants. It is submitted that the powers of the Institute and the SEBI are altogether different and bot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also gone through the documents forming part of the petition including the show-cause notices issued to the petitioners. 16. The principal question which requires consideration is as to whether the show-cause notices issued by the SEBI to the petitioners can be said to be on the face of it without jurisdiction so as to quash the further proceedings initiated on the said notices by SEBI and as to whether by initiating such proceedings, the SEBI can be said to have encroached upon the powers of the Institute under the CA Act? 17. Before we proceed further, it is necessary to have a glimpse of the relevant provisions of the SEBI Act. The SEBI Act has been enacted to provide for the establishment of a Board to protect the interests of investors in securities and to promote the development of, and to regulate, the securities market and for matters connected therewith or incidental thereto. Section 11 deals with the powers and functions of the Board which reads as under : "11. (1) Subject to the provisions of this Act, it shall be the duty of the Board to protect the interests of investors in securities and to promote the development of, and to regulate the securities market, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forming such other functions as may be prescribed." ****** (4) Without prejudice to the provisions contained in sub-sections (1), (2), (2A) and (3) and section 11B, the Board may, by an order, for reasons to be recorded in writing, in the interest of investors or securities market, take any of the following measures, either pending investigation or inquiry or on completion of such investigation or inquiry, namely : ( a )Suspend the trading of any security in a recognized stock exchange; ( b )Restrain persons from accessing the securities market and prohibit any person associated with securities market to buy, sell or deal in securities; ( c )Suspend any office-bearer of any stock exchange or self-regulatory organization from holding such position; ( d )Impound and retain the proceeds or securities in respect of any transactions which is under investigation; ( e )Attach, after passing of an order on an application made for approval by the Judicial Magistrate of the first class having jurisdiction, for a period not exceeding one month, one or more bank account or accounts of any intermediary or any person associated with the securities market in any manner involved in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l to the investors or the securities market; or ( b )Any intermediary or any person associated with the securities market has violated any of the provisions of this Act or the rules or the regulations made or directions issued by the Board thereunder, it may, at any time by order in writing, direct any person (hereafter in this section referred to as the Investigating Authority) specified in the order to investigate the affairs of such intermediary or persons associated with the securities market and to report thereon to the Board." Section 12A deals with prohibition of manipulative and deceptive devices, insider trading and substantial acquisition of securities or control and the same reads as under : "12A. No person shall directly or indirectly : ( a )Use or employ, in connection with the issue, purchase or sale of any securities listed or proposed to be listed on a recognized stock exchange any manipulative or deceptive device or contrivance in contravention of the provisions of this Act or the rules or the regulations made thereunder; ( b )Employ any device, scheme or artifice to defraud in connection with issue or dealing in securities which are listed or proposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lent; (7)deceptive behaviour by a person depriving another of informed consent or full participation; a false statement made without reasonable ground for believing it to be true; (8)the act of an issuer of securities giving out misinformation that affects the market price of the security, resulting in investors being effectively misled even though they did not rely on the statement itself or anything derived from it other than the market price;" A reading of the said provisions discloses the scope and width of the powers vested with the SEBI to be exercised in the interest of investors and for regulating the securities market. The SEBI in its capacity as a Market Regulator can take any of the measures mentioned in sub-section (2) of section 11 towards the said end. The said measures are only illustrative and not exhaustive and in a given case the SEBI considering the duty it is enjoined with may take such measures as it deems appropriate. In our view, the words employed in the aforesaid provisions are of wide amplitude and would therefore take within its sweep a Chartered Accountant if his activities are detrimental to the interest of the investors or the securities market. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the submissions of the learned counsel for the petitioners, reference is required to be made to various judgments. In the case of Calcutta Discount Co. Ltd. v. ITO AIR 1961 SC 372, it has been observed by the Supreme Court as under : "29. In the present case the company contends that the conditions precedent for assumption of jurisdiction under section 34 were not satisfied and came to the court at the earliest opportunity. There is nothing in its conduct which would justify the refusal of proper relief under Article 226. When the Constitution confers on the High Courts the power to give relief it becomes the duty of the Courts to give such relief in fit cases and the courts would be failing to perform their duty if relief is refused without adequate reasons. In the present case, we can find no reason for which relief should be refused. 30. We have, therefore, come to the conclusion that the company was entitled to an order directing the Income-tax Officer not to take any action on the basis of the three impugned notices." 20. Learned counsel for the petitioners has relied upon the decision of the Supreme Court in the case of Management of Express Newspaper (P.) Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant that the Industrial Tribunal would have jurisdiction to deal with the merits of the dispute. This position is also not in dispute." 21. As regards the submission that the concerned Member of the SEBI who is conducting the investigation should not have deferred the pronouncement of his decision regarding the preliminary point and should have pronounced the same, reference has been placed on the decision of the Supreme Court in the case of State of Punjab v. Jagdev Singh Talwandi AIR 1984 SC 444. It has been held by the Supreme Court that it is desirable that the final order which the High Court intends to pass should not be announced until a reasoned judgment is ready for pronouncement. Reference is also made to the decision of the Supreme Court in the case of National Council for Cement Building Materials v. State of Haryana [1996] 3 SCC 206, wherein it has been held by the Supreme Court in paragraphs 11, 12 and 16 as under : "11. Usually, whenever a reference comes up before the Industrial Tribunal, the establishment, in order to delay the proceedings, raises the dispute whether it is an industry as defined in section 2( j ); or whether the dispute referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a [2007] 1 SCC 732, wherein the Supreme Court has considered the question about jurisdictional facts and adjudicatory facts. It may be relevant to quote hereunder the apt observations of the Supreme Court in paragraphs 73, 74, 75 and 85 and the same read thus : "73. It is, therefore, clear that before section 17(2)( ii ) can be invoked or pressed into service and before calculation of concession as per Rule 3 is made, the authority exercising power must come to a positive conclusion that it is a concession. "Concession" in our judgment is, thus a foundational, fundamental or jurisdictional fact. 74. A "jurisdictional fact" is a fact which must exist before a Court, Tribunal or an authority assumes jurisdiction over a particular matter. A jurisdictional fact is one on existence or non-existence of which depends jurisdiction of a court, a Tribunal or an authority. It is the fact upon which an administrative agency s power to act depends. If the jurisdictional fact does not exist, the court, authority or officer cannot act. If a court or authority wrongly assumes the existence of such fact, the order can be questioned by a writ of certiorari. The underlying principle is that by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Court may not decide the preliminary point asking the party to challenge the decisions after the adjudication process is over but such bar is not absolute and in a given case if the petitions are filed on the ground that the authority who has initiated the proceedings lacks inherent jurisdiction, the Court may entertain such writ petition and may issue appropriate writ, order or direction under Article 226 of the Constitution of India. During the course of hearing, Mr. Ravi Kadam has also submitted that it is not his contention that the petitions are not maintainable at all. In a given case if it is found that the authority which initiated the proceedings has absolutely no jurisdiction on the face of it, such authority can be prevented from proceeding further by issuing suitable writ, order or direction in the nature of certiorari or prohibition. In our view, therefore, it cannot be said that this petition is not maintainable or that it is not required to be entertained at all. In any case since considerable arguments at length have been advanced before us on the question whether the Chartered Accountants can be subjected to the jurisdiction of the SEBI or not and in view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat he was instrumental in preparing false and fabricated accounts, the SEBI has absolutely no power to take any remedial or preventive measures in such a case. It cannot be said that the SEBI cannot give appropriate directions in safeguarding the interest of the investors of a listed Company. Whether such directions and orders are required to be issued or not is a matter of inquiry. In our view, the jurisdiction of SEBI would also depend upon the evidence which is available during such inquiry. It is true, as argued by the learned counsel for the petitioners, that the SEBI cannot regulate the profession of Chartered Accountants. This proposition cannot be disputed in any manner. It is required to be noted that by taking remedial and preventive measures in the interest of investors and for regulating the securities market, if any steps are taken by the SEBI, it can never be said that it is regulating the profession of the Chartered Accountants. So far as listed Companies are concerned, the SEBI has all the powers under the Act and the Regulations to take all remedial and protective measures to safeguard the interest of investors and securities market. So far as the role of Auditors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty of the SEBI to see that the interests of the investors are protected and remedial and preventive measures are required to be taken in this behalf. It is required to be noted that in the instant case the inquiry is still pending and ultimately the decision is required to be taken by SEBI on the basis of available evidence on record. However, in order to determine the jurisdiction of SEBI, the contents of the show-cause notice which is the first step of initiating proceedings are required to be seen. Reading the contents of the show-cause notices and the relevant statutory provisions, it cannot be said that the SEBI has no jurisdiction at all to enquire into the affairs of the petitioners insofar as it relate to Satyam. In the case of Government contracts, the Government is entitled to blacklist a particular tenderer with a view to see that such a tenderer is not allowed to participate in the future tenders the same is done by following appropriate procedure in that behalf. In our view, it cannot be said that the show-cause notices issued by SEBI are, on the face of it, not sustainable on the ground that the SEBI has no jurisdiction to enter into the affairs of the petitioners o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o accept the submission of the learned counsel for the petitioners that SEBI lacks jurisdiction to adjudicate the said issue or to proceed further on the basis of such show-cause notices. Though we agree with the learned counsel for the petitioners that when the petitioners gave applications that this issue should be decided as a preliminary issue, the concerned Member of the SEBI should have disposed of the said applications, by passing some order instead of keeping the said applications pending. Whenever any application is preferred, order is required to be passed in accordance with law. However, since the matter has been considered by us at length to find out whether SEBI lacks the inherent jurisdiction to deal with the subject-matter, the question as to whether the SEBI has committed error in not passing any order on the application has become academic. 27. Insofar as the submission of Mr. Dwarkadas that the petitioners are not directly associated by the securities market is concerned, it is true that the petitioners may not have any direct association with the securities market since they were performing their duties as Auditors of the Company and were associated with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l steps which may include keeping a person including a Chartered Accountant at a safe distance from the securities market. SEBI can always take preventive as well as remedial measures in this behalf. Exercising such powers, therefore, cannot be said to be in any way in conflict with the powers of the Institute under the CA Act. If ultimately any decision is taken by debarring any particular person from auditing the books of a listed company, such direction can always be said to be within the powers of SEBI and that is in the aid of regulating the affairs in connection with the investors interests and the interest of the securities market. By exercising such powers, it cannot be said that the SEBI is trying to regulate the profession of Chartered Accountants in any manner and in that view of the matter, in our view, it can never be said that it is in conflict with section 24 of the CA Act. 29. Insofar as the submission of Mr. Dwarkadas that an Auditor can be removed only as per section 227 of the Companies Act is concerned, it is true that section 227 of the Companies Act provides for removing of an Auditor. However that is an independent and separate power altogether. So far as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sleading. 2. The auditor shall make a report to the members of the company on the accounts examined by him, and on every balance-sheet and profit and loss account and on every other document declared by this Act to be part of or annexed to the balance-sheet or profit and loss account which are laid before the company in general meeting during his tenure of office, and the report shall state whether, in his opinion and to the best of his information and according to the explanations given to him, the said accounts give the information required by this Act in the manner so required and give a true and fair view ( i )in the case of the balance-sheet, of the state of the company s affairs as at the end of its financial years; and ( ii )in the case of the profit and loss account, of the profit or loss for its financial year. (3) The Auditor s report shall also state - ( a )whether he has obtained all the informations and explanations which to the best of his knowledge and belief were necessary for the purposes of his audit; ( b )whether, in his opinion, proper books of account as required by law have been kept by the company so far as appears from his examination of those b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... virtue of any provisions contained in this or any other Act, and ( b )those provisions are specified in the balance-sheet and profit and loss account of the company." 30. As pointed out earlier, the aforesaid provisions are independent, over and above the powers available to the SEBI under the SEBI Act. It, cannot be said that the SEBI has no power to take remedial measures as provided under section 11 of the SEBI Act. It is required to be noted that so far as the powers of the Institute are concerned, the same are in connection with prohibiting the Chartered Accountant from practising and removing his name from the roll which cannot be said to be similar to the powers prescribed under sections 11 and 12 of the SEBI Act as well as the Regulations framed thereunder. For example, under section 24 of the SEBI Act, SEBI is even entitled to take penal action which powers are not available with the Institute in any manner. At this stage even the provisions of the Consumer Act may also be taken into account whereunder in the matter of deficiency in service, an appropriate order can be passed even against a professional but that would not mean that while exercising such powers the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any if by continuing such person as an Auditor of a listed Company, it may hamper the interest of the investors of such a listed Company. Considering the matter from the aforesaid angle and considering the provisions of the SEBI Act, Companies Act and CA Act, in our view, it can never be said that the SEBI has absolutely no jurisdiction and that professionals like Chartered Accountants cannot be subjected to any inquiry or proceedings by the SEBI on the ground that it is only the Institute which can take care of such a situation. So far as the Regulations are concerned, they have been framed under section 30 of the SEBI Act. Reading the said section discloses that the SEBI is vested with the necessary powers for safeguarding the interest of investors by framing appropriate regulations. The SEBI Regulations are wide enough to be attracted to cover the nature of allegations made in the show-cause notices. Whether the allegations stand proved would be a matter of inquiry on the basis of evidence. 33. At this stage reference is required to be made to a decision of the Supreme Court in the case of Supreme Court Bar Association v. Union of India [1998] 4 SCC 409 wherein the Supre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . As regards the professional norms are concerned, it is true, as submitted by Mr. Dwarkadas, that it is only the Institute which is the regulating body to deal with the same. However, in a given case, if there is prima facie evidence in connection with the conduct of a Chartered Accountant such as fabricating the books of account, etc., the SEBI can certainly give appropriate direction not to utilize the services of such a Chartered Accountant in the matter of audit of a listed Company. At this stage we would like to put a word of caution that these observations have been made by us only with a view to find out whether SEBI lacks inherent jurisdiction and it should not mean that this Court has expressed any opinion regarding the conduct of a particular Chartered Accountant involved in the case. However, in order to find out whether there is total lack of jurisdiction or whether SEBI has jurisdiction to adjudicate the matter and in order to examine this question that these observations have been made by us. Since the inquiry has not commenced, we have merely confined ourselves to the allegations made in the show-cause notices to find out as to whether SEBI has jurisdiction to pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inted him to perform the auditing. The contributors to the provident fund had a beneficial interest in the fund and the primary object of auditing the fund was to appraise them of the true financial position of the accounts and investments made from time to time. Respondent No. 1 therefore owed a duty to the contributors to the Provident Fund for making a true report to them of the financial position. In other words, the auditing was intended for protection of the beneficiaries and the auditor was expected to examine the accounts maintained by the trustees with a view to inform the beneficiaries of the true financial position. The auditor is, in such a case, under a clear duty towards the beneficiaries "to probe into the transactions" and to report on their true character. In our opinion, the legal position of the audit in the present case is similar to that of the auditor under the Indian Companies Act, 1956. In such a case the audit is intended for the protection of the shareholders and the auditor is expected to examine the accounts maintained by the Directors with a view to inform the shareholders of the true financial position of the Company. The Directors occupy a fiduciary p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... summons reference has not been made to these regulations is immaterial. Such omission by itself does not invalidate the exercise of authority. Law in this regard is well settled that if the source of power exists, non-mentioning of it or wrong labelling of it would not invalidate exercise of such power. I am unable to sustain the contention of the petitioners that the Board has no power to conduct an inquiry into the transaction of transfer of shares by the petitioners and the inquiry of the Board must stop at the stock brokers or intermediaries who have been instructed to carry out the transactions of the petitioners. The contention that information cannot be called for from the petitioners because clause 11( 2 ) restricts calling for information from undertaking inspection, conducting inquiries and audits of the stock exchanges, mutual funds, other persons associated with the securities market and self-regulatory organisations in the securities market only and the petitioners do not fall in any of them must also fail." 37. Mr. Ravi Kadam has also placed reliance on the judgment of the Delhi High Court in the case of M.Z. Khan v. Securities Exchange Board of India A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 100 per share which is the same rate at which the shares of SVCL held by the financial institutions were purchased by the nine companies. It cannot be said that the reason for not suspending the process set in motion by the public announcement was not adequate or was arbitrary or the reason suffered from illegality or irrationality. The grant of interim order was in the discretion of the SEBI. Such direction cannot be interfered with even when serious and substantial questions have been raised by the petitioner and the third respondent. I have no doubt that the SEBI will bestow its consideration on the issues which arise in the case. The determination of these questions will not be made by this Court sitting in writ jurisdiction when such determination lies in the domain of the authorities mentioned in the Regulations...." 38. Considering the judgments and the scheme of the Act which we have adverted to earlier, the SEBI in the instant case, on the basis of show-cause notices, has jurisdiction to inquire into and investigate the matter in connection with manipulating and fabricating the books of account and balance-sheets of the Company. The powers of the SEBI are, therefore, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the evidence which may be available at the time of inquiry. All these aspects are therefore left to the consideration of SPBI at the time of passing final order in the inquiry. 40. It is needless to say and also as pointed out by Mr. Ravi Kadam that SEBI is not going to transgress its jurisdiction and will confine itself to the object of protecting the interests of investors and regulating the securities market. It is in the said context that the above matter will have to be considered. The SEBI shall now proceed with the matter as indicated above in accordance with law and pass appropriate orders after conclusion of the inquiry. At the time of passing the ultimate order, the SEBI shall consider the aspect as to whether any directions can be issued by SEBI on the basis of evidence available on record as per the provisions of sections 11 and 12 of the SEBI Act. The ultimate jurisdiction of SEBI for giving any such direction will depend upon the evidence which may be available during the course of inquiry. By this judgment, we have only indicated that on the face of it, it cannot be said that SEBI has absolutely no jurisdiction to issue show-cause notices against the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X
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